Synaptics (SYNA) To Report Q3 Earnings: What's In Store?

Synaptics Inc. (SYNA) is set to report third-quarter fiscal 2017 results on Apr 27. Last quarter, the company posted a positive earnings surprise of 6%. In the trailing four quarters, the company posted an average positive earnings surprise of 34.77%.

Let’s see how things are shaping up for this quarter.

Factors to Consider

Synaptics is primarily engaged in developing human interface solutions for a wide array of mobile computing and communications devices and is one of the leading suppliers of touchpads to the notebook computer market. The company’s clientele includes Apple Inc. (NASDAQ:AAPL) , Xiaomi, Samsung (KS:005930), Huawei and Lenovo among others.

However, Synaptics’ supplier relationship with Apple is under threat as recently noted by Bloomberg, which cited analyst reports.

We believe that this uncertainty has dented share price movement in recent times. On a year-to-date basis Synaptics’ shares have declined 2.6% against the Zacks Electronics Semi-conductors Industry’s gain of 16.9%.

Nevertheless, the company remains focused on enhancing its Automotive Solutions and Touch and Display Driver Integration (TDDI) and fingerprint portfolio. We expect Synaptics’ to continue gaining from improved margins of each of its product lines. Its partnership with Huawei has greatly expanded its offerings.

For third-quarter 2017, the company expects revenues in a range of $410 million to $450 million. Non-GAAP earnings are expected to be in the $1.05 to $1.35 per share bracket.

Synaptics Incorporated Price and EPS Surprise

Synaptics Incorporated Price and EPS Surprise | Synaptics Incorporated Quote

Earnings Whispers

Our proven model does not conclusively show that Synaptics is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below.

Zacks ESP: Synaptics currently has an Earnings ESP of 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 85 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Synaptics has a Zacks Rank #2. Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are a few companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming release:

TIM Participacoes (NYSE:TSU) with an Earnings ESP of +11.11% and Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

DragonWave (TO:DRWI) with an Earnings ESP of +8.82% and a Zacks Rank #2.

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